SGAE given the boot by CISAC for a period of 1 year and fined for $3.3 M

By Onkar Gupte
June 06, 2019
SGAE given the boot by CISAC for a period of 1 year and fined for $3.3 M

Spanish collecting society (SGAE) expelled by International Confederation (CISAC) on a temporary basis of 1 year to mend their ways

The Spanish General Society of Authors and Publishers (SGAE) notorious for shady dealings, corruptions, embezzlement, fraud and dozens of other scandals was finally expelled from the International Confederation of Authors' Societies (CISAC) on a temporary basis. SGAE wont be a part of CISAC for a period of 1 year in order to reform and change their methods. The International society also fined them for $3.3 Million Dollars over abuse of their power and anti-competitive behavior. A voting took place at the recently held general assembly meeting of CISAC wherein the members ruled in favor of expelling SGAE by a vote of 3,580 votes to 346.

The Scam

Things had finally reached their boiling point after SGAE's long running royalty scam came into the limelight.  The "La Rueda" (The Wheel) scam was recently uncovered by the Spanish Authorities in which TV executives would play late night music listing SGAE members as Composers, Publishers and writers. All the royalty thus generated was then split between TV executives and members of SGAE. Unlike most other societies, SGAE collects a fixed amount from television stations, so playing more music would not change the overall amount of money broadcasters owe.

Investigation by CISAC in 2018

CISAC carried their own investigation into SGAE's conduct which was published in April 2018. The International confederation found out "serious concerns" about conflicts of interest, "distorted and inequitable distribution of royalties" and a "lack of regard for the common good." Following their investigation CISAC recommended the organization to make 17 changes concerning its governance and business practices. After seeing no progress and reforms by Dec 2018, CISAC had to take strict action. Speaking to Billboard, CISAC director general Gadi Oron said
We hope there will now be pressure on the society to reform and change and address all of the very serious issues that we have identified."
Over the years the Spanish Society has been shrouded in controversies, scams and large scale frauds. In 2011 the headquarters of SGAE was raided for the first time. Back in 2017, 18 people were arrested at the Spanish Society's Madrid headquarters for their suspected involvement in a scam in which members had falsely claimed ownership of public-domain classical compositions by Mozart, Vivaldi and other composers and had registered them in their own names as well as those of their parents, children and pets. After La Rueda scam was uncovered, the Spanish authorities subsequently raided the headquarters once again and arrested members of SGAE. In a recent court ruling, CNMC - the Supreme court of Spain approved a €3.1 million ($3.5 million) fine against SGAE. After finding out that SGAE had continued their old ways and engaged in “single and continued infringement” of free competition and existing European Union law, the CNMC was left with no choice but to fine the Spanish Society this time around €2.95 million ($3.3 million). The matter came into spotlight after Unison and Dama, a collecting society and an audiovisual authors’ rights group, respectively, filed complaints about the Spanish society's behavior.

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